The company, as part of an expansion of its feature film slate, is aiming to start production early next year with Brian Henson directing and producing. Samantha Sprecher and Lisa Henson are also producing.

The move comes with Henson Co.’s live-action family comedy “Alexander and the Terrible, Horrible, No Good, Very Bad Day” opening Friday through Disney in the U.S. “Alexander” is expected to take in about $20 million in its opening weekend and contend for the top spot against the second weekend of “Gone Girl.”

CEO Lisa Henson told Variety that casting on “Which Witch” is underway with the company finalizing negotiations with a digital animation studio and a foreign financier for the project. The project is based on Eva Ibbotson’s 1979 book in which a wizard holds a contest among the seven witches of Todcaster to determine which witch he will marry.

Crystal has logged extensive work in the animated world as the one-eyed Mike character in Disney-Pixar’s “Monsters Inc.” and “Monsters University.”

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“When Brian Henson called me about it, I didn’t know the book,” Crystal said. “But it’s a fantastic story, and I brought in a wonderful writer, Michael Feldman, and we’ve written a terrific and inventive script. I’ll play a character as well, which will be great fun because he actually has two eyes.”

The studio is run by the late Jim Henson’s grown children, Lisa and Brian, with a staff of about 80 employees. Lisa Henson, who’s been CEO for the past decade, previously served as president of Columbia Pictures.

Lisa Henson said that Crystal would be heavily involved with production, expected to last for about two years. “We’re focusing heavily on getting the tone right,” she added.

Henson explained that her initial efforts at the company were focused on developing its proprietary animation technology and guiding the TV business, which led to the PBS Kids series “Sid the Science Kid” and “Dinosaur Train.”

Those shows were followed by the productions of “Doozers,” “Hi Opie!” and “Pajanimals” with the newest projects “Chatter Zoo” and “Splash,” currently in development.

On the feature side, the company optioned “Frog and Toad,” based on the four “Frog and Toad” books by Arnold Lobel, two years ago. (Rights to The Muppets were sold to Disney in 2004).

It’s also working on a quartet of legacy titles in the Henson library — a “Fraggle Rock” movie that’s been in development at New Regency; a sequel to 1982’s “The Dark Crystal”; a sequel to 1986’s “Labyrinth”; and a movie based on the Emmet Otter character.

UPDATE – 2:29 pm Oct. 13 — Henson Co. is working on a project based on “Labyrinth” but it is not a sequel.

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